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Transcript of The People Sector World Bank South Asia Region Agriculture & Rural Development Community-driven...
The People Sector
World BankSouth Asia RegionAgriculture & Rural Development
Community-driven Innovation
Adolfo Brizzi, World Bank
Stockholm, December 9, 2008
The People Sector
World BankSouth Asia RegionAgriculture & Rural Development
Community-driven Innovation
The Power of Voice and Scale
Adolfo Brizzi, World BankStockholm, December 9, 2008
The typical development organigram…
Line Dept.
Central Gov
Provincial Gov
District Gov
Local Gov.
Utility comp.Water,Sanitation,Electricity
Agri. Extension & Research, Irrigation, Roads
Ag. Credit Banks
Basic Services and Infrastructure
Credit, Insurance
Social Funds
Limitations of a public sector development monopoly
Mostly supply-driven and top-down Serious coordination issue among multiple Government
programs Local innovation and home-grown solutions are inhibited Poor public sector performance in delivering services Imbalance between supply and demand
Poor people are seen as “beneficiaries”, not clients Dispensing favors rather than facilitating access to services by the
poor Accountability is upwards rather than downwards Entrenched vested interests Lack of competition, i.e., doubtful efficiency
Where is the private sector ? The private sector is on the fence
• Crowded out by public sector, policy restrictions, red tape• Not interested in poor, uneducated, dispersed producers• Poor infrastructure and rural investment climate• Lack of scale and quality (norms and standards)
• High transaction costs, risky business and low returns
…..or it came, but no competition and too easy to collude (farmers with no bargaining power)
• ⇒Private sector generated limited community innovation
Putting people first
How to make the public sector and the private sector more efficient and accountable in the absence of competition ?
How to encourage community-based innovation ?
Need to recognize:• Government is not all there is in the life of a poor community• Government and markets can fail• Build on communities own capacity too get out of poverty • Start from the demand side. But difficult if communities remain disorganized • Innovation: necessity is the mother of ingenuity, but barriers to opportunities need
to be removed• Organize and reach scale as a way to reduce transaction costs• Develop social accountability tools and demand for good governance at the
community level
The need for a new organigram
Banks and MFI
Traders
Agr. markets
Transport
Money lenders
Tribal institutions
NGOsGovernment
Private service providers (health & education)
Wage employment
Local judge
.
Parliamentarians
But watch for sharks !
Where are we coming from: a dysfunctional model
Public Sector
Private Sector
Communities
Sharks and intermediaries
of all sorts
Dominant, Inefficient Public Sector
Disinterested Private Sector
Disorganized smallholders and groups
High transaction costs
We need a new model: PPP with a “P” for people
Smallholder Sector
Public Sector Private Sector
Becoming a market and leveraging more competition, access to banking, markets, etc.
Demand for governance & accountability
Devise regulatory framework and incentive mechanism for PPP
Rethink public sector intervention and find better ways to deliver services
Attract private sector and link markets and services with a business model
People Sector
Public Sector Private Sector
Organize communities
The People Sector
Hypothesis: The supply side (both public and private) cannot be made more efficient in helping the poor unless it’s in the context of an organized demand side
Principle: Help communities help themselves to address– Government failures– Market failures
Rationale: Poor people have a huge untapped potential For public sector - Largest voting bank For private sector - Largest potential market for products and
services
The People Sector
Strategy: Gaining Voice Reaching Scale
How: 1. The software: Organize institutions OF the
poor (vs. institutions FOR the poor) 2. The hardware: Put productive assets in
the hands of poor people and provide opportunities for income generation
⇒Needs both - voice is of little use if nobody listens
The Software
Social Mobilization and Institution Building• Groups organized around a strong
common purpose (savings & loans, joint economic activities)
• The nature and the quality of the initial grouping determines the graduation model
• Strong inclusion and (self) targeting methodology – Mutual trust against risks of elite capture
• Scale creates a market and leverages access to banking, microfinance, agr. markets, insurance, service providers (crowding-in)
• Social agendas (disabled, HIV/AIDS, domestic violence, alcoholism, caste)
• Foundation for local governance and accountability.
The Graduation Model
Affinity-basedSavings and Loans
Activity-basedAssets/marketing
Resource-based Irrigation, Watershed,
forestry
FranchisingRetailing
Commodity Cooperatives Federation of
User Groups
Marketing services
Banking Savings &
Loans Coops
Different levels of associative and federative tiers
TradeCommunity enterprises
The Hardware Creation of productive assets
• Use grants or micro-credit to put productive assets in the hands of poor people
• Use income generating activities and group inter-loaning as a way to demonstrate creditworthiness of poor groups
• Own savings plus income from assets will leverage and crowd-in financial service providers
• Give communities access and manage-ment authority over natural resources (land, forest, fisheries, water)
The People Sector gives a meaning to pro-poor growth—i.e., growth generated by poor people
Andhra Pradesh: Self-help Groups Federation Model
Self-Help Groups (SHGs)10–15 members per SHGRoles and Responsibilities:•Thrift and credit activities•Participatory monitoring of the groups•Group level poverty reduction plans•Household investment plans
Village Organization (VO)150–200 members on averageActivists, Book Keepers and para professionalsRoles and Responsibilities:•Strengthening of SHGs•Arrange lines of credit to SHGs•Social action•Village development•Support activists
Sub-district Federation or Mandal Samakhya4000-6000 members on averageYoung professional staffRoles and Responsibilities:•Support to VOs•Secure linkage with Govt. Depts.•Auditing of the groups•Microfinance functions
Sub-district
Federation
District Federati
on
SHG SHG SHG
District Federation or Zilla Samakhya200,000– 250,000 members on averageRoles and Responsibilities:•Conducts market interface•Maintains MIS/IT system
Village Organizat
ion
Self-Help Groups formed in all villages of AP > 9 million rural women organized in:
• 809,800 SHGs• 34,850 VOs • 1,098 Sub-Districts Organizations• 22 District Federations
Reaching >90% of rural poor (some 45M people) Own funds (savings + interest earned on inter-loaning) : $ 790 M Cumulative credit from formal institutions since 2000 has exceeded $ 2.7
billion in 2007 Repayment rates in excess of 95%
FROM: not daring to enter a bank branch TO: having become one of the best clients
It also revived the rural banking businessIt took 8 years
to get here
The Power Of Voice And Scale
The Power Of Voice And Scale Vis-à-vis The Public Sector
Communities
Public SectorPublic Sector
People Sector
Intermediaries
• Foundation of local governance and social accountability• Increased participation and inclusion in Village Council meetings• New tools and mechanisms: self-identification of the poor (village wealth
ranking), score cards to evaluate Gov. programs, social audits, expenditure tracking
• Co-management of Gov. programs: mid-day meals, scholarships for girl students, safety nets and pensions, better targeting
• Representation: SHG members getting elected in local governments• Accountability shifts downwards rather than upwards
⇒ Demand for Governance and Accountability⇒
The power of voice and scale vis-à-vis the private sector
Business at the bottom of the pyramid (BOP): organizing the tail-end of the value chains.
Transforming a large pool of poor people into vast untapped markets with much reduced transaction costs
Enhances private companies’ ability to access BOP markets (both as consumers and producers) through dealerships and partnership
Federations operate the retail end of the value chain, particularly backward integration through village procurement and service centers including commission agents
Private Sector
Communities
Intermediaries
People Sector
Private Sector
⇒⇒Scale for market
& business
Voice and Scale for Innovation: Procurement Centers and Trade
Reduce transaction costs among dispersed farmers and the market (1 center for 5/6 villages)
Ensure better terms of trade through farmers networks and product aggregation
Collective buying of products and managing centers as trade platforms
Used as franchises for agri-businesses Coverage: 300K families; 3,493 PCs; 84
Commodities; $70 M turnover in 2008 Developing a network of low-cost service
providers and paraprofessionals: Barefoot Botanists, Book keepers, Quality Controllers,… i.e. jobs
Public and private agencies use PC to outsource or retail services
Further integration of PCs through an IT structure will facilitate access to a much greater market (domestic and international)
Partners include:•Markfed (Largest State Agriculture
Cooperative)•National Dairy Development Board•ITC Ltd (Agribusiness Multinational) for
Turmeric, Chillies & Neem•Olam International (Largest Exporter of
Cashews)•Agrotech Foods Ltd. (Multinational-
refined oil) •Ayurveda Companies for medicinal
plants
Voice and Scale for Innovation Youth Employment SHG federations offer:
• Large pool of easily identifiable unemployed youth• Substantial economy of scale for training and recruitment through one entry point• Credibility that provides moral guarantee• Low transaction costs for employers (SHG federations as temp agencies and job
placement centers)• Academies being established in each district for customised training (English,
computer skills, soft skills)• Substantial amounts of remittances going back to villages• 150,000 jobs provided thus far• Greatest demand from: security sector, retail, services (health centers, repair
shops, restaurants), basic IT/computer skills (data entry), construction.
Main partners/employers: • McDonalds, Dell, Microsoft, Pizza Hut,
Bajaj, Tata, Wipro, HDFC Bank, Reliance)
Voice and Scale for InnovationSmart Cards for Banking and SS benefits Issues: financial exclusion of the poor, high transaction costs for the
banks, lack of product differentiation, inefficient social security schemes (transparency, targeting, disbursement delays)
Each VO forms a Customer Service Provider Group to identify the beneficiaries of Gov. SS programs, calculate the benefits (pension, wages), prepare payment lists, fill the forms, etc..
Commercial banks (under MOU with the Government) train the CSO and provide the financial infrastructure (mobile phone, smart cards, card reader, printer)
Beneficiaries receive payments from banks through their branchless CSO and make contributions
Pilot: 6 districts, 2,272 VOs, 780,000 people enrolled Opportunities: shift the whole SHG banking to smart cards and
branchless banking
Voice and Scale for Innovation: Community Managed Life/ Disability Insurance Scheme
VO: collects premiums from SHG members, fills forms, reports claims Sd fed.: verifies claims and documentation, recommends payment, trains VO District fed.: Maintains the MIS, issues certificates of insurance, makes
payments, link up with Insurance Comp. for re-insurance, web-based claim transaction, training.
Leveraging economy of scale & group insurance. • Claim processing time reduced from 4 weeks to 1 week. Fed. provides immediate
relief within 24 hrs. Low administration cost $0.22/policy.
• >8 million SHG members insured (market of 30 M).
• Premium collected $17.5M. 85% transferred to insurance companies who hold 100% of the liability. 15% for processing cost and reserves
• Large growth of the re-insurance sector.
• Opportunity to access large SHG market through franchising and retailing insurance policies at least cost.
• Organization and scale for last mile retailing
• Livestock insurance scheme is currently being piloted
Voice and Scale for InnovationReaching out through ICT Sri Lankan ITSHED is the communities’ web portal
• Winner of 2008 Manthan Award on ICT & Digital Content for Development (E-Enterprise and Livelihood)
• Communities post aggregate info on available products (quantity, norms, specifications), and pool of job seekers
• Private sector establishes business linkages directly with federations Training village youth on computer skills and basic ICT (Cisco IT
Essentials) ICT provides quantum leap away from collusion of intermediaries to
increased market access and competition for large-volume low-cost products and jobs
ICT reduces digital divide and helps villages become a market rather than ICT just as a source of information
http://www.itshed.nethttp://www.itshed.net